The decision to retire is not an easy one, and there are many important considerations to take into account, including financial security. Additionally, your emotional and mental health are key factors to be carefully looked at. For most people, this decision starts to take shape as we get closer to our 65th birthday.
The transition to retirement is not without stress, and feeling financially and emotionally ready are key. For many people, their job is a big part of their identity. Giving up that identity and redefining a future one for yourself may take an emotional toll as you navigate through this new period in your life.
Here are some key signs to help you know when it’s the right time to retire:
- You’re financially set — This is probably the most important aspect for most people. You are not ready to retire unless you have adequate savings and a plan for early and late retirement. You will need to have enough money to last you through the rest of your life. Create a budget that includes your expected expenses during retirement. Take a look at the income you expect to receive from retirement savings and other investments. Factor in fixed-income sources such as pensions and Social Security to see whether your income can cover the expenses outlined in your budget. If not, you may need to work a little longer to reach your goal. Make every effort to pay down any debt so you do not carry it into retirement.
- Your health care costs are covered — When you turn 65, you qualify to receive Medicare health insurance. However, you will still need to pay the monthly premiums for Medicare Part B. If you purchase Medicare Advantage (Part C) or a prescription drug plan (Part D), there will be additional costs involved.
You’re emotionally ready to leave the workforce — If most of the people in your social circle are those you see at work every day, you need to recognize that you may not be able to maintain those close ties. This is an opportunity for you to think about your future and how you want to spend your time. Having social interactions is especially important as we age. LeAnn Erenberger, senior vice president and wealth management adviser at U.S. Bancorp Investments, tells us that “not knowing how you will spend your time can have negative health effects, both physical and emotional.” This is the time to start doing the things you have put off for too long. Start a new hobby, travel, learn a new language, take up an instrument or volunteer, while making new friends along the way. - You’re feeling burnt out — Work should give you a sense of purpose not just a paycheck. If you have come to the point in your career where work feels physically or emotionally draining, then it’s time to retire. Too much stress at work can have a direct impact on our health, including causing hypertension, heart attack and stroke. Staying at a job that is no longer fulfilling is a good reason to leave.
The time to plan for your retirement is now. Envision the life you want to live in retirement and work toward that goal while you are still working. The day will come, and you will be financially and emotionally prepared to move on. Contact a financial planner for more advice on retiring comfortably.
